The Kiwi Cash Connection
Dec 13, 2023
For New Zealanders, retaining cash ‘is both a current and future need’, supporting an inclusive and resilient economy and fulfilling important cultural and social roles.
Figures from the Reserve Bank of New Zealand (RBNZ) show 43 percent of citizens use cash regularly compared with 37 percent who say they have not used cash over the past seven days. Earlier this year, Ian Woolford, RBNZ’s Director of Money and Cash said ‘maintaining the cash system is both a current and future need’ and plays a vital role ‘in the stability of institutions and services, and in monetary sovereignty’.
I don’t buy into a binary narrative involving the death of cash and the rise of digital alternatives because these are not pure substitutes for each other, and we know from our research that the public values the option of cash.
1News points out various advantages of cash, beginning with the unmatched privacy it offers, with no personal data collected and no financial trail left when transacting with banknotes and coins. ‘Customers might also find themselves stung with more surcharges for card transactions [in a cashless society]’ since cash offers people a surcharge-free way to pay, and provides competition to other, profit-making payment methods. It also adds that, crucially, cash enables payments during internet and power outages, such as those seen across the North Island in February.
Digital payments are susceptible to technical glitches or other problems, ranging from as small as a dead phone battery, rendering your digital wallet useless, to a major natural disaster wiping out connectivity in a region. This was the case in parts of the North Island following Cyclone Gabrielle earlier this year.
An issues paper from RBNZ also highlights that cash is central to many cultural and social activities, ranging from people’s participation in weddings and funerals to interactions between parents and children. It says these uses of physical money ‘build a sense of community’ and concludes there is ‘a high value placed on cash’ even by non-cash users who recognise its benefits to others.
Cash remains essential for a significant minority to live their lives, and is still valued by most as both an option and back-up to other means of payment.